The chief inspector of prisons in England and Wales, Anne Owers, is not known for her hyperbole. Her reports are measured and to the point.

But her annual report into the state of jails will add to the pressure being felt by the Home Office. It contains stark warnings of failures to plan for what she says was a foreseeable serious crisis in numbers - and poses huge questions over whether there is an easy way out.

Over five years she has harried and badgered ministers to reform the service to make it both more humane and more likely to turn out people who will not reoffend. Some 2,000 of her recommendations to individual prisons have been accepted in the past year alone.

But with the prison population near capacity, Ms Owers says jails are at a critical point. It is no means clear, she warns, whether in five years time we will look back on 2005-06 as a "staging post" in slow and steady improvements - or the moment when jails began to slide back again.

In short, she says that important improvements have been made because the Prison Service wants to do more to rehabilitate inmates. There has been a drop in suicide rates, for instance, and improvements in education.

But those improvements have effectively stalled because the system cannot improve while dealing with what may be a long-term population crisis.

'Foreseeable situation'

She argues the current situation, including using hundreds of police cells to hold inmates, was foreseeable and comes down to ministerial decisions over resources for both prisons and broader rehabilitation and resettlement policies.

It is normally considered good practice to build an ark before a flood not during it

For example, take indeterminate sentences, given to some dangerous offenders. These relatively new sentences come with a tariff but no automatic release date, the idea being that a prisoner will only be let out if they can show they have sufficiently reformed.

Prime Minister Tony Blair told MPs earlier in January that the 2,000 currently inside on indeterminate sentences were an example of how the government had protected the public from those posing a serious threat to the public.

But for two years running Ms Owers has warned these prisoners are rarely being placed in appropriate prisons with experts and courses aimed at turning around their behaviour.

They cannot be released because they are a danger - but they cannot currently be steered towards rehabilitation because there is no capacity to properly deal with them.

These inmates have become a contributor to, and casualty of, the overcrowding problem, she says.

"It's like a funnel where you are pouring liquid in with no tap at the bottom," she said.

This is one of a number of red light problems that Ms Owers says the prison service has been aware of.

"I warned last April that we would hit the buffers in the autumn and the house is now full," she said.

"We have a crisis which is impacting on the ability to rehabilitate prisoners and making prisons riskier places."

Build out of a crisis?

The key warning that pervades Ms Owers' report is that the government may not be able to build itself out of a crisis. More resources on cells, without more resources on rehabilitation or solutions in the community will lead to "ever faster revolving doors" of inmates coming and going, rather than being reformed.

WHAT THE INSPECTOR PRAISED

Safer custody

Education

Resettlement

Healthcare

Juveniles

But progress at risk because of current crisis

She underlines this in the annual report by examining the numbers of women and mentally ill people inside. In both cases, she questions what exactly is being achieved.

Many women, she argues, should be in smaller units closer to their families where there is a greater chance they will come out without having lost their home and children - and therefore a greater possibility of getting out of a life of crime. Despite wide-spread support for these units, many plans have been "kicked into the long grass" because resources are not available, she says.

On mental illness, Ms Owers echoes a chorus of critics who have warned for years that prisons are becoming the replacement institution for closed mental hospitals because of a lack of investment in "care in the community" programmes.

Her recent visit to Feltham Young Offenders Institution, west London, typified this problem, she said.

"The hospital wing was entirely full of acutely mentally ill young men," she said. "Why? Because there was no forensic adolescent bed [for mentally ill patients] south of Birmingham."

The Home Secretary has said that he shares Anne Owers' views and concerns across a number of issues. The question is what happens now. Some 350 new prison places will be available soon - but the full 8,000 new places will not be available for four years.